Emirate hopes to rival Antwerp, New York and Mumbai as local gem hub
DDE chief says tender to become monthly event as demand from local and international traders goes 'beyond expectations'

Dubai has held the first rough diamond tender at the Gulf emirate's new diamond exchange, a bourse it hopes will rival Antwerp, New York and Mumbai as a global gem hub.

Noora Jamsheer, CEO of Dubai Diamond Exchange (DDE), said the tender would become a monthly event as demand from local and international traders was "beyond expectations."

"Dubai is becoming a major center in the diamond world," said Jamsheer, adding the $15 million tender, which closed on Jan. 26, was "of great significance" to Dubai's ambitions despite its small size.

Freddy Hanard, a regional manager at ABN Amro's diamond section, said there had been "big appetite" for the tender from international diamond companies.

"It was an important first step for Dubai," he said by telephone from Antwerp. But he said Dubai must achieve "critical mass in the size and number of players" if the DDE is to succeed.

ABN Amro provided banking services on the tender, which drew 30 firms. About 45,000 carats were sold at an average carat price of more than $300 - 90 percent of the diamonds offered.

It was the DDE's second tender, after Russian group Kristall sold $2 million in cut diamonds to Dubai jewellers in December 2004.

Peter Meeus, head of the Diamond High Council, has said Antwerp was worried about the emergence of Dubai as a rival after the emirate exported $1 billion worth of uncut diamonds to Antwerp in 2004, up 750 percent from two years earlier.

The DDE is part of Dubai Metals and Commodities Center (DMCC), a state initiative to establish Dubai as a global hub for trading physical and paper diamonds, gold, energy and soft commodities.

Dubai, part of the oil-rich United Arab Emirates, is already a regional gold hub with about 10 percent of the world's trade.

The emirate, the Gulf's trade and tourism center, is striving to diversify its economy to compensate for its falling revenues from dwindling oil output.

Jamsheer said diamond companies such as Kristall and India's Rosy Blue had joined DDE to position themselves in Dubai.

"Now you don't have to go to Africa, you can stop in Dubai," she said.

Dubai has been a hub for rough diamond trade for many years, but the trade was largely unregulated until the DMCC opened in 2002.

Since then, Dubai has joined the Kimberley Process in a bid to stop the flow of conflict diamonds through the emirate.

Jamsheer declined to comment on DDE's relationship with Israel's diamond industry. The UAE, a member of the Arab League, does not have diplomatic relations with Israel.

But Hanard said links between the two were growing.

A Lebanese diamond dealer in Antwerp said he welcomed the move as it could generate further business for Arab traders, and was hopeful that Lebanon would become a signatory of the Kimberley Process.

Last June, Lebanon was dropped from a list of participating countries because it had failed to enact legislation compliant with the Kimberley Process standards. The decision came after Lebanese President Emile Lahoud vetoed a draft law that would have confirmed Lebanese participation in the process. Lahoud is said to have considered several elements in the draft law as unclear.

As a result, Kimberley Process member countries are not able to engage in any rough diamond trade with Lebanon. Lebanon has an estimated 50 diamond cutting and polishing factories, but much of the trade operates in the black market. A dealer told The Daily Star last March that than an estimated 80 percent of the diamonds entering the country did so illegally, and that drug dealers in Lebanon use diamonds to launder money.

Lebanon is to reapply for membership of the Kimberley Process this year.